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Wednesday, January 6, 2010

Market Thought... tug-of-war

Interesting action today. Tech stocks, primarily GOOG and AAPL, were down fairly nicely today, consolidating from their fairly overbought conditions. While others were up fairly nicely. This causing the SP500 to squeeze out a gain.

Basically the internals seemed too balanced to suggest a major move downward.

I am preparing for a market correction. For instance, I know I will be entering the 115 SPY March puts and maybe even enter GS puts if it rallies too much. But today's action suggests we will get a meaningful correction later-rather-than-sooner.

The Techs started to consolidate from their overbought position with today's move. (Probably sell the news due to CES. ) With GOOG and AAPL declining, I am of the bias to enter a position versus add to the selling. Looking at March 600 GOOG calls and April 210 AAPL calls.

I will still look to pull the trigger on selling/protecting if the Vix declines as indicated in my previous posts or individual stocks get too overbought.